TL;DR
- Osmosis DAO is on the verge of approving a ‘fee-free’ Bitcoin bridge to enhance liquidity within the Cosmos ecosystem.
- The proposal has strong backing with 91.7% community votes in favor, aiming to eliminate Bitcoin bridge fees through Nomic.
- Nomic would receive a percentage of nBTC taker fees as compensation, promoting nBTC usage and facilitating Bitcoin liquidity integration into OSMO.
The Osmosis DAO community, responsible for governing the Cosmos-based decentralized exchange, is close to approving an initiative that could transform Bitcoin’s accessibility and liquidity within the Cosmos ecosystem. The proposal, largely supported by 91.7% of favorable votes, aims to adopt a ‘fee-free’ Bitcoin bridge through collaboration with the decentralized bridging protocol, Nomic.
This strategy aims to eliminate fees associated with Bitcoin bridge transactions originating or terminating in OSMO. Currently, Nomic facilitates direct Bitcoin deposits into Osmosis, converting it into nBTC, with 1% fees for deposits and 0.5% for transfers. The proposal would exempt these bridge fees, though a flat Bitcoin miner fee may still apply to withdrawals to cover transaction costs.
To offset these fee exemptions, Nomic would receive a percentage of the taker fees generated by trading nBTC and its derivatives on Osmosis. Specifically, Nomic would receive 10% of the taker fees from nBTC-related operations on the exchange, along with a proportional share of fees from nBTC derivatives trades.
Osmosis and Nomic Embrace a DAO-to-DAO Approach
This revenue-sharing model will promote nBTC usage on the chain and facilitate more cost-effective and direct integration of Bitcoin liquidity into the OSMO ecosystem. The initiative stands out for its innovative DAO-to-DAO agreement approach, opening new possibilities for collaborative business models in the appchain environment.
According to Sunny Aggarwal, co-founder of OSMO, this proposal marks a significant advancement with the introduction of a ‘rev share’ business model for bridges, particularly beneficial for blockchain applications like Osmosis. The implementation of this mechanism is subject to final approval by the governance of Nomic and OSMO, initially set for six months with potential renewal through mutual governance action.
The adoption of this ‘fee-free’ Bitcoin bridge could not only increase liquidity and transaction efficiency within Cosmos but also set a precedent for effective collaboration among decentralized protocols.
